Introduction to company retirement accounts (CRAs)

Introduction to company retirement accounts (CRAs) 

A company retirement account (CRA) Tooltip is not a retirement plan; it is a cash brokerage account for employer-sponsored retirement plans allowing investing and trading of existing retirement plan assets through Schwab. CRAs accommodate a variety of plan types, including 401(k)s, Roth 401(k)s, money purchase pension plans, profit-sharing plans, defined-benefit plans, and nonqualified plans.

With a CRA, trustees can keep all their assets in a single pooled account or set up separate accounts for each of the employee participants. Trustees can also name employees as authorized traders on the account, giving them permission to direct the investments of their own account.

Key information related to CRAs:

Eligibility
  • Any custom-designed retirement plan where the plan sponsor has filed the plan's legal documentation directly with the IRS.
  • Eligible plan types include 401(k)s, individually designed money purchase retirement plans, profit-sharing plans, defined-benefit plans, and nonqualified plans.
  • 403(b)(7) assets cannot be invested through a CRA. The 403(b)(7) plan is not available at Schwab.
Key features

A Schwab CRA (also known as a pension trust) offers:

  • A full range of investment options, open brokerage
  • Flexibility to invest the plan's assets in a single account or establish separate accounts for each plan participant
Account options

Employers opening CRAs can choose between two different plan types and whether they want the plan to be self-directed Tooltip .

 Choice 1: All assets in one accountChoice 2: Separate participant accounts
Client wantsAll assets in a single pooled plan-level accountEach participant to have the option to direct the investments on their own account
Account type neededPension trust master accountPension trust master account
Company retirement accounts for each participant
Responsible partiesTrustee only; trustees may act individuallyTrustee
Participant with a completed limited power of attorney (LPOA) on file
Pricing
  • Minimum opening deposit: $0
  • $0 opening or maintenance fees
  • Other account fees, fund expenses, and brokerage commissions may apply
  • Deadlines
  • Contributions
Subject to the terms of the plan
Tax ramificationsSchwab does not provide any tax reporting, tax withholding, or plan administration for company retirement accounts (pension trusts).

The trustee for the plan, recordkeeper, or plan administrator, as applicable, is responsible for the preparation, distribution, and/or filing of all federal tax returns, reports, tax withholding elections, and forms related to the plan. These include, but are not limited to, Form 5500 Annual Returns, IRS Form 945, and the IRS Form 1099 series. The recordkeeper or plan administrator, as applicable, is also responsible for remittance to the IRS or any applicable state any taxes related to withholding on distributions from the retirement plan. 

For information about income limitations, withdrawal penalties, distribution requirements, and more, refer to the following table:

Income limitationsSubject to the terms of the plan
Additional features
Account administration

Schwab is the plan custodian and does not perform plan administration. Trustees, recordkeepers, or plan administrators Tooltip are responsible for all administrative functions. Common administrative tasks include:

  • Tax filing Tooltip , withholding, reporting, and distributing
  • Recordkeeping
  • Maintaining beneficiary information
Roles and authorities

The roles within a CRA include:

 Trustees*Participants*Plan administrators
DefinitionIndividuals who manage the assets held in the CRA under the terms of the CRA's trust agreement.Eligible employees who are covered by the CRA.A third-party administrator (TPA) who may be appointed and authorized to act on the account on behalf of the employer and participants.
AuthoritiesFull legal authority to act on the CRA.Limited authority.
Can view account information and buy and sell securities on their accounts. Requires a role of for the benefit of (FBO) with limited power of attorney (LPOA) or plan participant (PPART).
Generally, TPAs have access to view account information only and receive duplicate statements and confirms.

 

* In some cases, the trustee and participant is the same person

For accounts with multiple trustees, some transactions may require the signatures and approvals of all the trustees before Schwab can act. Refer to the table below for examples of a trustee's authority.

Trustee can act individuallyAll trustees must sign/approve
  • Withdrawals
  • Trade Orders
  • Address change
  • Close accounts
  • TOA out
  • Add LPOA
  • Add options*
  • Add checkwriting*
  • Add trustee*

* A new master CRA application is required even if the account is open to add these account features.

DistributionsNormal distributions:

Refer your client to their plan administrator or trustee before they withdraw funds from the account. The plan administrator or trustee can provide guidelines for withdrawals; they can also make sure the withdrawal is properly reported.

Go to the Forms library on Schwab Advisor Center and search for Check & Internal Transfer (Journal) Form or Wire Transfer to complete the CRA distributions. Only a trustee can authorize a disbursement.

RMDs:

Refer your client to their plan administrator for required minimum distribution (RMD) information.
Withdrawal penalties
  • Penalties are based on the guidelines of the plan document.
  • Participants should consult with the plan administrator to determine if the withdrawal is considered a prohibited action.
  • Participants are not authorized to make disbursements from the account.
ERISACRAs are Employee Retirement Income Security Act (ERISA) accounts and are governed by all ERISA guidelines and rules.
BeneficiariesSchwab does not maintain information on CRA beneficiaries. Refer plan participants to their trustee or plan administrator to add a beneficiary to their account.

What is Schwab's role with CRAs?
Schwab is the custodian of the plan assets. Schwab does not provide document services, account administration, recordkeeping, or tax reporting.

What is the difference between a pension trust (PT) and a CRA?
Schwab often uses pension trusts or company retirement accounts as generic terms when referring to business retirement plans, but they are specific account registration types.

  • PTs are older account types (pre-2003) and act as the master account for CRA plans.
  • In 2003, Schwab added the CRA participant account type.
  • The PT master and CRA participant accounts are used together to create the CRA plan.
  • The CRA registration is only used on the retail/non-AS side, all AS accounts are opened with the Pension Trust registration internally; even though the account application is called Company Retirement Account (CRA) Application

Are investment choices for CRAs limited?
No. The Schwab CRA offers the full range of investment choices available with all Schwab brokerage accounts, including asset allocation portfolios, mutual funds, stocks, and fixed investments such as bonds and annuities. However, participants should consult with their plan administrators to confirm any investment restrictions under their specific plan provisions.

Can I get a power of attorney for my client's individual CRA?
Pending the specific plan provisions, you can be assigned a WPFA, WPFA-C, or an LPOA.

How should I handle questions about plan distributions or plan rules?
Refer all participants, including those no longer with the company, back to the trustee. Trustees have the authority to direct fund disbursements and can answer questions about the plan.

Are CRAs eligible for loans?
Schwab does not offer or monitor plan loans for CRAs. Refer participants back to the trustee or plan administrator with questions about loans or other feature availability.

How does a trustee grant authority to a third-party administrator (TPA)?
Trustees can name a TPA in the CRA master account application. If they add a TPA after the account is established, Schwab requires a new master account application, signed by all trustees.

What does my client need to know about tax reporting and filing?
The trustee, recordkeeper, or plan administrator is responsible for the preparation, distribution, and filing of all federal tax returns, reports, tax withholding elections, and forms related to the plan, including, but not limited to, Form 5500 Annual Returns, IRS Form 945, and the IRS Form 1099 series.

The following are available to assist you:

How to open a company retirement account (CRA)
Introduction to personal defined benefit plans
Introduction to Retirement Plan Solutions

For more information, see: